Which of the following is true of the APV method and the WACC method?
A) The APV method discounts only one set of cash flows,whereas the WACC method discounts separately the cash flows of the project and the cash flows of the tax savings or other debt subsidies.
B) The WACC method would treat the cash flows from the tax breaks in a similar manner to the incremental cash flows generated by subsidized loans,whereas the APV method draws a distinction between subsidies related to project?s financing and those not related to financing.
C) Both methods use the unlevered cash flows generated by the project as their starting point,assuming that the project is financed entirely by equity.
D) Both methods account for benefits from debt financing by adjusting the discount rate.
Correct Answer:
Verified
Q9: Which of the following is the correct
Q10: The adjusted present value method:
A)calculates the NPV
Q11: The unlevered cost of capital is the:
A)expected
Q12: A firm's marginal cost of capital:
A)is the
Q13: A company has a debt-to-equity ratio of
Q15: BM Corporation has a debt-to-equity ratio of
Q16: Which of the following is an assumption
Q17: Which of the following is an assumption
Q18: In the absence of default:
A)the present value
Q19: Which of the following can offset the
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